Vegas bet the house to switch up image

Jun. 13, 2013

A view looking north along Las Vegas Boulevard in Las Vegas. Visitors last year spent $6.2 billion to gamble in the city, twice as much as what was spent in Atlantic City. / THOMAS P. COSTELLO/STAFF PHOTOGRAPHER

LAS VEGAS FLOURISHED

Will Atlantic City casinos survive? Visit www.APP.com/goingforbroke to view videos, interactive data, photo galleries and prior stories in this series.

The series

SUNDAY: Why Atlantic City’s decline will hurt everyone. MONDAY: How other states steal Atlantic City’s thunder. TUESDAY: Why the state has failed Atlantic City. TODAY: Las Vegas reinvented itself. Is it too late for AC?

In this land of abundant sunshine, darkness has never been too far away.

Threats have stalked Las Vegas from the beginning, when the idea of a gambling mecca in the middle of the desert was at best a lofty prospect. Then came competition. Blight and crime. A recession.

And in the 1980s and ’90s, Las Vegas lagged in revenues and visitors behind a seaside upstart in New Jersey: Atlantic City, which hauled in $3 billion, then $4 billion, on its way to gaming glory.

For Atlantic City, it was a dream come true. Its powerhouse casinos could lift it as a gaming leader, an alluring, high-flying getaway and a nostrum to the city’s fiscal ills.

For Las Vegas, it was part of a wake-up call. Leaders realized “we need to diversify this economy; we’re not going to be the Lone Ranger here,” Mayor Carolyn G. Goodman said.

So it built ambitious new casinos; phased out the glut of cheap buffets in favor of world-class dining; attracted top-bill entertainment, shedding its reputation as a graveyard for once-great careers; and lured in new businesses, from a video game bar to a cutting-edge brain research center, by highlighting its low tax costs and 300 days of sunshine.

There is no more competition. Las Vegas led the nation’s gambling market in 2012, with $6.2 billion in revenue, while Atlantic City casino revenues dropped, again, to just more than $3 billion — back to where it was in the early ’90s.

“The dream of having Atlantic City as a direct rival to Las Vegas is certainly gone. There’s too much competition and we missed the opportunity,” said former New Jersey Sen. Robert Torricelli, a proponent of gambling in New Jersey who, 20 years ago, opposed a sports-betting ban in casinos that officials are now trying to overturn. “But Atlantic City can be stabilized as a regional gaming center. It can survive and still make a real contribution to the state.”

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3,400 flights a week

Yet last year, Las Vegas set a record for visitors, with 39.7 million, said analyst Jeremy Aguero, of the data firm Applied Analysis. There are 3,400 flights coming in to the local airport a week, Goodman said — a mix of gamblers, conventioners, young partygoers drawn to the burgeoning DJ-by-the-pool scene and gastronomes seeking top chefs like Gordon Ramsay, Julian Serrano and Joël Robuchon.

“There’s a sense of momentum here,” said Dr. Jeffrey L. Cummings, director of the Cleveland Clinic Lou Ruvo Center for Brain Health, which opened in 2010. Cummings came to Las Vegas from the world-renowned University of California, Los Angeles, for its diversity and potential impact in the medical field.

“This is known as Sin City,” he said, “and we decided that ‘sin’ meant Scientific Innovation Nevada.”

Whereas the Las Vegas skyline is a star cloud of flashing billboards and self-promotion, the most common signs off the Atlantic City Expressway tell visitors to pay at least $5 to park at a casino.

“You’re going to go someplace to gamble and have a good time and spend your money, and the first thing they do when you get there, they don’t say, ‘We’re glad to have you,’ ” said David G. Schwartz, director of the University of Las Vegas, Nevada Center for Gaming Research, and author of “Roll The Bones: The History of Gambling.” “They make you reach into your pocket and give them money for something you can get other places for free.”

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New casinos in the Northeast — Connecticut, Delaware, Maryland, New York and Pennsylvania — have siphoned about 40 percent of Atlantic City’s market, Schwartz said.

Ringed by desert mountains, Las Vegas is shielded from such large losses, despite in-state competition and gaming in Arizona and California.

Now, with states including Nevada and New Jersey seeking new revenue sources, online gaming is the imminent threat — or boon — to the gaming industry. Nobody knows.

The first virtual hand was dealt in Nevada on April 30, and New Jersey is soon to follow. Online gaming is open only to residents of states that have passed online gaming laws. If the federal government opens online gaming up as an interstate enterprise, “You’re talking about a multibillion dollar industry instantly created in the United States,” Aguero said.

It’s either city’s money to lose. Atlantic City, whose casinos posted a 63 percent gross-revenue loss in the first quarter, could use every dollar of help.

Las Vegas always has been more than just gaming, and its reinvention has been 25 years in the making.

“People from all over the world have heard of Las Vegas,” said Nancy Benedict, a Las Vegas tour guide who grew up in Fair Haven and owns property in Red Bank. “People from all over the world, have they heard of Atlantic City? I don’t know.”

She continued, “Atlantic City needs to find (its) own niche. What would bring a tourist to Atlantic City?”

Less gambling,
more entertainment

That’s what city and tourism leaders are trying to figure out. The Atlantic City Alliance is touting a 70,000-square-foot Bass Pro Shops scheduled to open and the return of the Miss America pageant, which left for Las Vegas eight years ago.

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“Atlantic City is sort of back where Las Vegas was, where gaming was too reliant,” alliance president Elizabeth B. Cartmell said.

In 2007, gaming represented 88 percent of total net revenue for Atlantic City hotels and casinos; in 2012, it was 82 percent, said Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College. Ten years ago, gaming represented more than 50 percent of all revenue Las Vegas hotels and casinos generated; today it’s less than 40 percent, Aguero said.

“Entertainment, food and beverage, conventions, trade shows, essentially have allowed this economy to grow and to prosper and, frankly, be more stable than it would have been otherwise,” Aguero said.

Gaming and entertainment still reign, and on the Las Vegas Strip alone there are $6 billion in projects planned: a $400 million arena and renovation behind New York New York and the Monte Carlo; a multibillion-dollar hotel-and-casino development on 87 acres; and a $550 million, 200,000-square-foot open-air retail center and massive Ferris wheel, the High Roller, by Caesars Entertainment.

North of the Strip, the downtown and Fremont Street area is experiencing a renaissance to rival any other in America, primarily driven by thirtysomething pathfinders.

Christopher LaPorte, 36, took a vacant, two-storefront building on Fremont Street and turned it into an arcade nightclub, Insert Coin(s), that attracts up to 1,700 customers on a weekend night, he said.

Rooms are booked on weekends at the El Cortez, the city’s oldest continuously operating casino, said executive vice president Alexandra Epstein, 28. Developer Sam Cherry’s SoHo lofts, the first residential high-rise downtown, are 90 percent full and the 34-year-old is eying two other large projects.

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In the fall, Schorr, 36, who grew up in Margate, is opening the Downtown Grand, a 700-room hotel and casino with 18 bars and restaurants.

And two years ago, Tony Hsieh, the 39-year-old venture capitalist and CEO of zappos.com, announced he will move the shoe-and-apparel company’s headquarters to the old city hall and will spend $350 million on a development, education and business initiative called the Downtown Project.

“That’s when I think downtown caught a little lightning in a bottle,” said Derek Stevens, an auto-parts supplier from Detroit who just wrapped up a $40 million renovation of The D hotel and casino.

“(Hsieh is) bringing in people from all over the country. He’s trying to build a whole community where everybody can work and play, and go from there,” Stevens said.

Stevens said he’s had a number of opportunities to operate in Atlantic City. But, with 7 percent sales tax, plus corporate and income tax in New Jersey, why would he?

They are barriers to getting a return, he said. Nevada has none of those taxes.

Overall, he said, “I didn’t see Atlantic City as a growing market.”

LaPorte, originally of Brooklyn, is a Rutgers University graduate who grew up visiting Atlantic City casinos. The customer service in Las Vegas is superior, the city is more business-friendly and, in terms of overall experience, he said: “Atlantic City is like that JV team; this is the varsity. But I don’t see why Atlantic City can’t go and become that.”